WORKING PAPER

Strategic Planning in a Time of Covid-19

Executive Summary

With coronavirus disrupting organizations and communities around the globe, we live in highly uncertain times. Yet, businesses still need to make decisions with long-term repercussions. Even while managing through the coronavirus crisis today, managers need to plan for what these decisions now will mean for the future. But how? Traditional approaches to strategic planning are not suitable – they minimize uncertainty, gloss over diverging views, and frequently avoid making hard choices. The direction they provide is often as vague as it is illusory.

Companies that have thrived in turbulence show a better way. Given our firm’s focus on new and rapidly changing industries, we work with these companies constantly. This paper shares lessons about how they consider scenarios, account for opposing viewpoints, force difficult decisions, and look dispassionately at both new threats and emerging opportunities. It also explains how, given current circumstances around distancing, virtual meetings can be quite effective at making these decisions.

THE BUSINESS IMPACTS OF CORONAVIRUS

Coronavirus impacts almost every industry and country on this earth. As with the 2008 financial crisis, the repercussions from this event will be felt for years to come – not just in psychology and balance sheets but also in changed habits, new business models, and reordered competitive rivals. There are at least four phases of this crisis to consider if you are creating a plan in the coming months:

• Phase 1: The initial period of hunkering down to await the impacts, as people and institutions try to maintain a semblance of normalcy but prepare for the worst
• Phase 2: A wave of unrelenting bad news as the impacts are felt on both a human and economic level
• Phase 3: A return to normalcy, as consumers return to old routines they yearn for, individuals overcome the virus and become immune, and vaccines are distributed
• Phase 4: A longer sorting out of new industry dynamics as the effects echo through coming years

Strategies should chart a path through these phases, cognizant that we do not really know the timing of any of them. Even as you make hard decisions today about near-term cuts and changes to operating models, keep in mind a view about the eventual industry landscape—this will help to steer your immediate decisions and ensure that you maintain and build up the groundwork for future growth. To do this, parse out what is known and what is uncertain, and plan for a tractable set of scenarios.
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Strategic plans that fail to account for uncertainty and change can become dangerous documents. They tend to give a false sense of certainty about the future and restrict the frame of reference when making key decisions. Such plans often distract attention from executives’ diverging beliefs about a business, and instead focus thoughts on a tightly-bounded, blinkered view
​that fits neatly into PowerPoint slides. They may paper over major issues by directing a company toward a laundry list of strategic “priorities” that spread staff too thinly and guarantee that the company executes very few things well.
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Strategic plans that fail to account for uncertainty and change can become dangerous documents.

​Good planning approaches – and the roadmaps that come out of them – devote substantial attention to contemplating the unknown. Not only do they identify major risks, assumptions, and uncertainties, but they lay out a path for overcoming those barriers, leaving room for course correction as the future becomes clear. Importantly, these sessions also help executives to decide what capabilities need to be built or developed to meet emerging trends and new industry patterns. They have clear next steps and metrics which lead directly to implementation.

​HAZARDS OF PLANNING INUNCERTAINTY 

​Discontinuities – shocks coming from public health or the economy, natural disasters, new technologies, innovative business models, and much else – create both threat and opportunity. Companies often grasp the threat. The opportunity created by change may be less visible. 
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By looking broadly at strategic options in uncertainty, companies may uncover both new ways to deal with threats and scantly-considered routes to grow.

Sometimes the upside of change is unnoticed by big companies, and new approaches may get their start with neglected customer types or in fields broadly ignored by the incumbents. To take just one example, in 1980 AT&T passed on entering the cellphone industry after estimating that by the year 2000 the total number of handsets in use worldwide would be 900,000 (they were off by 750 million).

​​Today, the stresses felt throughout industries with coronavirus disruptions are causing great pain, and this can quickly overturn longstanding competitive positions. It is critical to test how vulnerable your key competitive advantages are to these stressors and their lasting impacts. For instance, if a bank’s key regional advantage over fintech firms is its branch network, and people now get used to not coming to its branches, it needs to very quickly rethink how it retains customers and what its unique value proposition should be. Healthcare companies, too, need to question how the practice of medicine is changing, such as through the quick ramping up of telemedicine and extended teams, and how this impacts their products and commercial models.

Equally, firms should look at where the scrambling of industries creates opportunity. In the tech world where we frequently work, upheaval is the norm, and smart competitors are always trying to find a new basis for competition to seize markets. The logic extends far outside of tech, however. As the coronavirus epidemic dawned, the fast casual restaurant chain Panera launched a radically new proposition – an $8.99 monthly subscription for coffee, locking in customers to one trusted place for their ritual, and gaining profitable food orders when the customers come or deliveries are made.

Given the turbulent context, New Markets’ experience with planning in uncertainty points to four traps to avoid.

Trap 1: Fuzzy Objectives

Why are you writing a strategic plan? If you lack a detailed view of what choices the plan will inform, the document may not provide clear guidance when those calls need to get made. Equally, it will be too easy to cut and paste templates from previous years' plans when the real need is for fresh thinking. Strategic plans are usually best when they focus their attention on a handful of critical issues, not when they churn out a list of 20 must-do's that could have been written in any year, for any competitor.

Trap 2: No Scenarios

When surrounded by volatility, it is convenient to choose one consensus view of the future and to create plans accordingly. This is hazardous. If companies do not clearly map out alternative scenarios, they can be unwittingly blind to how surprises may upend carefully laid strategies. Have a set of scenarios to evaluate, and consider placing a small number of bets to exploit seemingly unlikely scenarios should they come to pass.

Trap 3: Too Many People

Industry upheaval often calls for tough choices, and consensus will not be possible. Pretending that a process will gain alignment simply invites passive-aggressive behavior, with participants feigning assent while they try to undermine key decisions behind the scenes. The result may be a messy compromise that fails to provide the organization with the focus required. In times of major uncertainty, seek input from many sources, but keep the most important meetings small. 

Trap 4: Too Rushed

Faced with a fire hose of challenges, many businesses in turbulent industries conclude they can dedicate only one meeting to strategic issues. That is a big problem. It is not necessary to spend several days in a far-off location – and these days the meeting can be executed well virtually – but the process will be far more effective if it is staged over the course of two to three meetings. That is particularly true in times of crisis as with the coronavirus, when collective perceptions can vary rapidly from one week to the next. Big decisions have to be framed and informed by data, and then thought through for execution. Clustering these steps into one meeting risks neglecting key details, or biasing discussions toward issues where data is readily at hand. Staging a handful of meetings over a few weeks allows ideas to percolate, reality checks to occur, and the appropriate research to take place.

SUCCESSFUL PLANNING IN UNCERTAINTY

Companies that have successfully traveled this road provide a template for how to proceed:

Best Practice 1: Defining Challenges

​A frank dialogue about strategy in uncertainty will usually produce a wide a range of opinions. Dig more deeply, and you will find that the diversity of views usually corresponds with how executives frame the problem. Pay attention up front to defining the challenges carefully. For instance, is it a collapse of consumer demand, decreased willingness to pay, or a change in who makes purchasing decisions? By aligning on the right issues, a team can focus on answering the questions that really matter and avoid meandering discussions. 

Best Practice 2: Clear Options

​Big companies often avoid making decisions. Choice means that someone loses, and that creates political risk. Yet, during industry tumult, muddling through is hazardous. Frame strategic discussions around a mutually exclusive menu of choices tied directly to agreed definitions of the challenge. The leap from present circumstances to the chosen future state does not need to occur overnight, but the destination has to be clear. At the same time, setting up milestones and “kill criteria” helps create faith that bad decisions can be corrected before it is too late.

Best Practice 3: Stay Humble

​In a turbulent environment, you may not even know what you do not know. If you can preserve strategic options through mechanisms such as partnering with outside companies or incubating a handful of new business models, by all means do so. These moves may require scant investment of money and time while providing critical hedges against unexpected changes in the marketplace. Likewise, it is important to avoid falling victim to the fear that uncertainty breeds. Companies often respond by clinging to one of two extremes: returning to a streamlined focus on the core business or placing an excessively large bet on a high-risk initiative. Addressing an unknown future requires maintaining a carefully balanced portfolio of initiatives that includes projects that are core, adjacent, and transformational.

ORGANIZING A VIRTUAL OR IN-PERSON EVENT

A strategy meeting can significantly aid the making of key decisions in uncertainty, and – with due care for key changes to meeting facilitation – it can be executed virtually. We work with many clients, particularly in the tech industry, that are quite adept at making virtual, multi-site meetings work for big decisions, and we have learned from their experience. Whether it is a virtual or in-person meeting, an experienced facilitator should help the group to concentrate on key issues, surface unpopular points of view, and ask difficult questions. Most critically, the event should be embedded in a well-defined process: 

Before the Meeting

Opinions of meeting participants should be understood in advance to ensure that key issues are addressed and carefully framed. There should be a clear view on what success for the meeting will look like. These interviews also provide an opportunity to discover areas of alignment and disagreement, as well as to pinpoint issues on which debate would be futile. By making these findings ahead of time, you can focus the meeting on pressing challenges.
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Set clear guidelines about what is in scope for the
​meeting and
what is not.

During the Meeting — Virtual or In-Person

Although the facilitator will encourage an open, candid discussion, it is equally important to set clear guidelines about what is in scope for the meeting and what is not. Time cannot be wasted rehashing old debates or contemplating unrelated pet projects. To help see issues from multiple viewpoints, however, key leaders should withhold early and vocal judgments, as these views can quickly shut down expansive thinking. Ultimately, one of the most important tasks for the facilitator will be ensuring that the attendees identify critical challenges and make decisions that address those challenges. 
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To make such a meeting work virtually, it is critical to keep a rapid pace of discussion, and therefore to guide the meeting through a detailed agenda. Quick breakout sessions may be advisable to ensure engagement and broad input. An experienced facilitator of virtual meetings is extremely helpful – not only will they make real discussion viable, but they will also connect the dots from focused conversation on issues to big themes, cross-cutting findings, and unexpected learnings. ​

After the Meeting

​A detailed write-up – created rapidly after the meeting – should capture nuances of the discussion, not just flipchart bullet points. Specific people should be tasked with following up on unresolved issues and be given concrete timelines and deliverables for those assignments. For example, this may involve gathering additional data or running quick prototype-and-learn experiments to test key assumptions. Dates for future meetings should be set well in advance so that there is no option to expand analysis of open issues too far, nor of ducking tough issues through avoiding follow-up discussions. 
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CONCLUSION

Strategic planning is a necessity for companies looking to thrive during uncertainty, and it cannot be approached haphazardly. Firms need to understand stakeholders’ ingoing perspectives, enable clear and open dialogue on key issues, and ensure that strategic objectives are obvious to all. Meeting facilitation is critical, especially when it must be virtual. Although diverse perspectives are important for developing ideas, the final output will result in difficult choices that foreclose some avenues. At the same time, good plans leave room to learn and adapt in uncertain environments. They identify critical challenges, direct teams’ priorities in meeting them, and lead to follow-up mechanisms that allow for reevaluation.

Developing effective strategy in turbulent times requires a small up-front investment in breaking old habits and having difficult discussions. It is worth the inconvenience. A good strategy is most relevant not when you foresee smooth sailing, but when big storms loom directly ahead.
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“New Markets Advisors did a terrific job of facilitating our annual Strategy Retreat with senior executives. A very thoughtful approach to meeting preparation was augmented by a deep interest in understanding our business and market environment. The post-workshop follow up was also exemplary.”

– Marlon Thompson, Senior Director, Strategic Planning, Siemens Healthcare Diagnostics